GONDWANALAND LIVES!

Geologists tell us that some 200 million years ago many of the earth’s major continents were joined together in a single “supercontinent” known as Gondwanaland. It included, in part, what is now South America, Africa, Australia, Antarctica, Arabia, and the Indian Peninsula. Over time, the continents slowly drifted apart, with their influence on each other diminishing correspondingly. The last few decades have seemingly brought all the continents crashing back together again. A problem encountered with the economy in Southeast Asia causes a stock market crash in Europe. A precipitous drop in the Chinese stock market—“The Shanghai Surprise”—produces a significant decline in the US Dow Jones. The devaluation of the Russian ruble brings down the best known hedge fund in America. And so it goes in this modern version of Gondwanaland. Tom Friedman’s previously noted remark that globalization has made Beijing, Bangalore, and Bethesda next door neighbors seems to have geologic as well as economic connotations!

It is tempting, especially for people who are disciples of Adam Smith (a group that includes myself), simply to dismiss the untidy competitiveness matter that results from this drift by saying, “Let market forces solve the problem.” But, unfortunately, that is the problem—at least from America’s perspective. Indeed, market forces are solving the problem. They are solving it by moving jobs outside the United States and by reducing or limiting compensation and benefits for employees who remain in the US workforce. Intel spokesperson Howard High explains: “We go where the smart people are. Now our business operations are two-thirds in the United States and one-third overseas. But that ratio will flip over in the next 10 years.” Following the pattern of many other companies, Dell announced in 2006 that it plans to increase its workforce in India by a factor of 2; that is, to 20,000, within 3 years. Already, 125 of the US Fortune 500 companies have

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Is America Falling Off the Flat Earth?.
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Is America Falling Off the Flat Earth?
GONDWANALAND LIVES!
Geologists tell us that some 200 million years ago many of the earth’s major continents were joined together in a single “supercontinent” known as Gondwanaland. It included, in part, what is now South America, Africa, Australia, Antarctica, Arabia, and the Indian Peninsula. Over time, the continents slowly drifted apart, with their influence on each other diminishing correspondingly. The last few decades have seemingly brought all the continents crashing back together again. A problem encountered with the economy in Southeast Asia causes a stock market crash in Europe. A precipitous drop in the Chinese stock market—“The Shanghai Surprise”—produces a significant decline in the US Dow Jones. The devaluation of the Russian ruble brings down the best known hedge fund in America. And so it goes in this modern version of Gondwanaland. Tom Friedman’s previously noted remark that globalization has made Beijing, Bangalore, and Bethesda next door neighbors seems to have geologic as well as economic connotations!
It is tempting, especially for people who are disciples of Adam Smith (a group that includes myself), simply to dismiss the untidy competitiveness matter that results from this drift by saying, “Let market forces solve the problem.” But, unfortunately, that is the problem—at least from America’s perspective. Indeed, market forces are solving the problem. They are solving it by moving jobs outside the United States and by reducing or limiting compensation and benefits for employees who remain in the US workforce. Intel spokesperson Howard High explains: “We go where the smart people are. Now our business operations are two-thirds in the United States and one-third overseas. But that ratio will flip over in the next 10 years.” Following the pattern of many other companies, Dell announced in 2006 that it plans to increase its workforce in India by a factor of 2; that is, to 20,000, within 3 years. Already, 125 of the US Fortune 500 companies have

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established research facilities in India, and the R&D boom in China and elsewhere is also gathering momentum.
The irony is that “American” companies may well survive, and their owners even prosper, but market forces will cause this to be at the expense of America’s workers. In such a scenario, America could evolve into a nation comprising a number of extremely wealthy shareholders (fully 55% of Finland-based Nokia’s shares are owned by Americans) and a few corporate headquarters (at least for a time) mired in an enormous sea of unemployment. That is not a formula for stability, national security, or quality of life for most of America’s future citizens.
Is it already too late? Is the contest, as some critics have suggested, already over? Is America’s future now behind it? One observer, Electrical Engineering Times, recently provided the following assessment in the introduction to its annual State of the Engineer Survey: “The single, young, energetic, upwardly mobile engineer constantly angling for better pay and greener pastures was for decades a Silicon Valley stereotype. But that image no longer holds true. The go-getters are now in India.”
In contrast, the National Academies and others believe that it is not too late, but they warn that it is getting late—very late. The good news is that we can do something about the competitiveness challenge, but only if we act with urgency and perseverance.
Less than 12 years after being surprised by Sputnik, America mobilized itself and placed the first of a dozen humans on the moon—and brought them all home safely. A similarly intense effort will be required if we are to give Americans the opportunity to hold high-quality jobs in the future. Other nations have faced serious competitive challenges and are doing something about them. Finland, Singapore, Portugal, and Ireland are prime examples. This past year, Portugal, in its overall environment of severe fiscal austerity, increased its investment in science and technology by 60%. In 1987, Ireland’s Gross Domestic Product (GDP) per capita was 31% below the average of the European Union (EU). It was, by almost any measure, among the poorest countries in Europe. In fact, 1% of its population—including some of the youngest and best educated members of its citizenry—was leaving the country each year in search of opportunity. But by 2003, Ireland’s GDP per capita had grown to 36% above the EU average; unemployment had fallen from 17% to 4% and young people were immigrating into Ireland from the rest of Europe to fill the new jobs being added at a net rate of 4% per year. Economist Dermot O’Brien describes this growth as “off the scale in European terms.”
But except for those who fail to adapt, this is a race without a finish line, a race that

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never ends. A few companies are now beginning to leave Ireland for greener pastures, such as Poland and Hungary, and Ireland is already taking steps to strengthen its competitiveness and attract them back.
How did Ireland do it? The answer is straightforward. They did it the old-fashioned way, the way America must do it and used to do it: “Get out and compete.” The choice is straightforward: in the 21st century, a developed nation can either innovate or evaporate. It can invest in the future, or it can enjoy the present until the present becomes the past.
In fact, it is already widely agreed that the key to survival for countries suffering severe labor-cost burdens is innovation: being first to acquire new knowledge, being first to create new products and services derived from that knowledge, and being first to market new products and services. (As used here, innovation includes entrepreneurship.) With regard to the latter activity, even a few weeks can make an immense difference between success and failure, so it is all the more important that we not handicap ourselves further with unneeded bureaucracy, regulation, and oversight. In some respects, America is doing well in that regard, being one of the fastest and least expensive places in the world to start a new business. In others—such as visa processing, product licensing, resolution of judicial matters, and export approval—it lags behind much of the world.
How does a nation achieve success in innovation in science and technology? There are at least four prominent ingredients in the process. The first is to generate a supply of brilliant scientists capable of producing new knowledge. The second is to invest sufficient funds to support the research of those scientists. The third is to provide a cadre of engineers who have a solid understanding of the fundamental laws of the universe yet are capable of the unconstrained, imaginative, creative thought that translates newly discovered scientific knowledge into products and services. And the fourth is to create an environment that is highly conducive to innovation. The latter, as already noted, includes the availability of risk capital, a sound patent policy, a constructive tax policy, and reasonable liability laws. It also includes a number of less tangible factors. Seven of the latter are briefly described below:
The first is an environment that provides researchers and inventors the freedom to explore—an environment that offers creative, inquisitive people the opportunity to pursue promising new avenues that may appear unexpectedly in their research and to be rewarded for their successes. The classic example at least of the former would be Alexander Fleming’s discovery of penicillin. It is said that this enormous contribution to humankind was brought about when Fleming, studying bacteria with his microscope, found that one of his slides had accidentally become contaminated with mold. He also noticed that

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bacteria were not growing in the vicinity of the mold. That simple observation led him to pursue a new avenue in his investigation, which ultimately resulted in the production of penicillin. Had Fleming been working in an environment wherein each moment’s activities were prescribed and freelance exploration was proscribed, it is quite likely that the invention of penicillin would have been left to others at a later time, to the detriment of those who were then in need.
In a similar vein, according to Smithsonian magazine, Percy Lebaron Spencer one day was standing near an operating magnetron in his radar laboratory at the Raytheon Company when he recognized that a candy bar in his pocket was melting. That observation led to the discovery of the microwave oven. (Apparently, Spencer didn’t stand there very long!)
It is important at this point to note the observation of Louis Pasteur that “chance favors only the prepared mind.”
The second element is an atmosphere wherein disruptive ideas are welcomed, not discouraged or dismissed. When Alexander Graham Bell offered his world-changing invention, the telephone, for a fee of $100,000 to the Western Union Company, at that time one of the giants on the American corporate scene, the company flatly rejected the offer. A memo dated in 1876 was later found in the files of Western Union dismissing the proposal on the following grounds: “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication.” After all, what could a person with a telephone say that couldn’t be said with Morse code?
It was Darryl F. Zanuck, of the motion picture company 20th Century Fox, who, on being exposed to a new device called television, remarked that it “won’t be able to hold any market after six months. People will soon get tired of staring at a plywood box every night.”
In contrast with those examples from the past is the modern semiconductor industry, which about every 2 years introduces a whole new generation of integrated circuits that largely destroys the market for the existing products.
Third is an environment that is tolerant of risk—not irrational, injudicious, intemperate, or “overly exuberant” risk but rather prudent risk based on considered judgments that offer commensurate payoffs. A classic example of the willingness to accept understood risks was an advertisement placed in a London newspaper in the early 1900s by Antarctic explorer Ernest Shackleton. It read, “Men wanted for hazardous journey. Small wages, bit-

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ter cold, long months of complete darkness. Constant danger. Safe return doubtful. Honor and recognition in case of success.” Inspired by this advertisement, thousands of would-be explorers sent applications to join the expedition.
Fourth is an understanding that failures must not be unreasonably punished. Researchers and entrepreneurs must have the freedom to fail. Of course, if failures are due to negligence, dishonesty, or any other form of malfeasance, that is an altogether different matter. Princeton University’s former President Harold Shapiro put this notion in these words: “I do not recommend failure. Nor am I attracted to the idea that failure builds character. But the willingness to accept the risk of failure is one of the costs of leadership and therefore, the price of all success.” Indeed, if failure is routinely punished, it is human nature to simply adopt a policy wherein no risks are taken—a policy under which it is likely that neither failure nor success will be achieved. But as Dean Kamen, the inventor of the Segway vehicle and numerous other items, reminds us, the lack of failure does not constitute success.
Fifth is an environment that produces and facilitates the search for discontinuities. Discontinuities—whether political, social, economic, technical, or other—are fertile grounds for innovators. In dealing with profoundly disruptive technology, it is noteworthy that history suggests that we generally overestimate the impact of a new technology in the short term and underestimate its impact in the longer term. Examples of the latter include the laser and the Internet, both of which were around for several decades before their broad impact was fully appreciated. A prime example of the former is represented in a quotation from Alex Lewyt, the founder and president of the home-appliance company that once bore his name, who informed us in 1955 that “nuclear-powered vacuum cleaners will be a reality within 10 years.” Fortunately, he was wrong.
Sixth is an interactive environment wherein creative people can identify and pursue synergistic cross-cutting technologies—what University of Maryland Dean of Engineering Nariman Farvardin has described as “hyphenated engineering.” Innovations are increasingly—but certainly not exclusively—being derived from the process of combining diverse technologies and disciplines, as opposed to mining of a single field in ever greater depth.
Seventh is the acceptance of the notion that those responsible for managing the innovation process must not run around pulling up the flowers, as the saying goes, to see whether their roots are healthy. Patience, continuity, and their close relative perseverance are all fundamental catalysts of successful innovation. Indeed, there is little that is easy about introducing change, that is, about innovating. Many difficult decisions are required,

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many failures suffered, and a great deal of scar tissue almost invariably accumulated. As Thomas Edison once observed with regard to his efforts to find a suitable filament for the electric light bulb, “I have not failed. I have just found 10,000 ways that won’t work.”
The National Academies’ Gathering Storm report on competitiveness provides an explicit plan to confront the competitiveness challenge facing America and its innovation enterprise. The plan consists of four overarching recommendations and 20 highly specific implementing actions. All are at the federal level because that was the charter of the Gathering Storm committee, but even more remains to be accomplished at the state and local levels. During the past year, several states have conducted Gathering Storm assessments of their own, and major convocations have been held at the state and national levels to address additional actions that could strengthen America’s future competitiveness.
In the Gathering Storm report, the Academies’ overall recommendations were coupled to the critical challenge of eliminating America’s energy vulnerability (as opposed to “becoming energy-independent”—a virtually unreachable goal). There were several reasons for making that connection. First, the availability of a sustainable supply of reliable, clean, affordable energy is critical to the nation’s economy and physical security and to the natural environment. Second, an attack on the energy-security problem happens to draw heavily on the same science and engineering fields that are currently in the greatest need of increased attention from a competitiveness standpoint: physics, chemistry, mathematics, and engineering. Third, an assault on energy vulnerability provides a focus and a framework for many of the recommendations in the report, much as the Apollo program to put humans on the moon provided cohesiveness to the national research and education reforms that followed the Soviet launch of Sputnik in 1957. The magnitude of the energy challenge to the nation is suggested by the fact that the United States, with only 5% of the world’s population, consumes 25% of the energy commercially produced on the entire planet.
The Gathering Storm committee’s four overarching, highly interdependent recommendations, in order of assigned importance, are:
Move the US K-12 education system to a leading position by global standards.
Double the real federal investment in basic research in mathematics, the physical sciences, and engineering over the next 7 years (while, at a minimum, maintaining the recently doubled real spending levels in the biosciences).

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Encourage more US citizens to pursue careers in mathematics, science, and engineering.
Rebuild the competitive ecosystem by introducing reforms in the nation’s tax, patent, immigration, and litigation policies.
In support of those general recommendations, the National Academies offered 20 specific implementing actions:
“10,000 Teachers Educating 10 Million Minds” (focuses on K-12 education, the committee’s unanimous highest priority).
Provide 10,000 new mathematics and science teachers each year by funding competitively awarded 4-year scholarships for US citizens at US institutions that offer special programs leading to core degrees in mathematics, science, or engineering accompanied by a teaching certificate. On graduation, participants would be required to teach in a public school for 5 years and, one hopes, beyond that time by choice.
Strengthen the skills of 250,000 current teachers by such actions as subsidizing the achievement of master’s degrees and participation in workshops, and create a world-class mathematics and science curriculum available for voluntary adoption by local school districts throughout the nation.
Increase the number of teachers qualified to teach Advanced Placement courses and the number of students enrolled in those courses by offering financial bonuses both to high-performing teachers and to students who excel.
“Sowing the Seeds” (focuses on funding for research).
Increase federal basic-research funding in the physical sciences, mathematics, and engineering by a real 10% each year over the next 7 years.
Provide research grants each year to 200 early-career researchers, payable over 5 years.

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Provide an incremental $500 million per year for at least 5 years to modernize the nation’s aging research facilities, with the expenditures overseen by a National Coordination Office for Research Infrastructure to be in the White House Office of Science and Technology Policy.
Allocate 8% of government research funds to pursuits specifically chosen at the discretion of local researchers and their managers, with emphasis on projects potentially offering a high payoff even though accompanied by substantial risk.
Establish an ARPA-E in the Department of Energy patterned after the highly successful DARPA in the Department of Defense but focused on major breakthroughs in energy security.
Institute a Presidential Innovation Award to stimulate advances serving the national interest.
“Best and Brightest” (focuses on higher education).
Provide 25,000 competitively awarded undergraduate scholarships each year of up to $20,000 per year for 4 years in the physical and life sciences, mathematics, and engineering for US citizens attending US institutions.
Provide 5,000 competitively awarded portable graduate fellowships each year of up to $20,000 per year in fields of national need.
Grant tax credits to employers that support continuing education for practicing scientists and engineers.
Continue to improve visa processing for international students.
Offer a 1-year visa extension to PhD recipients in science, technology, engineering, mathematics or other fields of national need, grant automatic work permits to those meeting security requirements and obtaining employment, provide a preferential system for acquiring citizenship for those who complete their degrees, and repeal the mandatory “go-away” provision now in US immigration law.
Offer preferential visas to applicants who have special skills in mathematics, science, engineering, and selected languages.

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Modify the “deemed export” law whereby faculty currently may be required to obtain export licenses to teach a technology class that includes a foreign student even if the material covered is unclassified.
“Incentives for Innovation” (focuses on innovation environment).
Adopt a “first-to-file” patent system and increase employment of the US Patent and Trademark Office to permit accelerated handling of patent matters.
Expand and make permanent the R&D tax credit that has been extended 11 times since it was first enacted in 1981 but never made permanent.
Restructure the corporate income-tax laws to help make firms that create jobs in the United States more competitive.
Increase broadband Internet access throughout the nation.
Many of these recommendations have been tested on smaller scales and demonstrated to work effectively. For example, the highest-priority recommendation—produce mathematics and science teachers holding primary degrees in these fields—has been addressed by at least two privately sponsored, highly successful endeavors: UTeach and Teach for America. UTeach reports that 22% of its participants, on completing their undergraduate degrees, voluntarily go on to teach in high school. Even more significant, 82% of those who do so are still teaching 5 years later. Teach for America seeks volunteers to teach in the most challenging urban and rural schools (20% teach mathematics and science). The program has become one of the 10 largest employers on college campuses nationally. Last year 10% of the seniors at Duke, Amherst, and the University of Chicago competed for positions in the program, along with 7% at Princeton and Yale. An independent study by Mathematics Policy Research reports that Teach for America members “produced higher [student] test scores than other teachers in their schools—not just other novice teachers or uncertified teachers, but also veteran and certified teachers.” When members staffed a school opened for children displaced by hurricane Katrina in New Orleans, initial testing showed the students were 1.7 grade levels behind in reading and 1.5 levels behind in mathematics, but after just 7 months of instruction by Teach for America participants the students gained 1.3 grade levels in reading and 2.0 in mathematics.

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What will all the National Academies’ recommendations cost? Can we afford it? The answer to the first question is $9 billion the first year, growing to $19 billion per year steady-state. The answer to the second question is that we cannot afford not to do these things or the equivalent. Last year, as a nation we spent $7 billion gambling on the Super Bowl. We devoted $13 billion to pornography. We spent $32 billion on movies and DVDs. We have a federal budget of $2.8 trillion, and a GDP of $13 trillion. The affordability of funding for education, research, and innovation is simply a matter of whatever priority we wish to assign to meeting the competitiveness challenge and offering our children and grandchildren the opportunity to enjoy a high-quality standard of living.